Political Instability Is an Impediment to Development Mainly Because It

question 109

Multiple Choice

Political instability is an impediment to development mainly because it:

• A)undermines both domestic and foreign investment in a developing country.
• B)produces excessive levels of domestic saving.
• C)redistributes income.
• D)creates cultural and social differences among groups in developing countries.

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Definitions:

Taking a Loss

The action of selling an asset for less than its purchase price, resulting in a financial loss for the seller.

Regulated Natural Monopolies

Companies that operate in a market with no competition due to high infrastructure costs, but their prices and services are regulated by the government to protect consumers.

Public Utilities

Companies that provide essential services such as water, electricity, and telecommunications to the public, usually subject to government regulation.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of operations and output increases.